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Rite Aid Corp (NYSE:RAD)
Total Inventories
$2,998 Mil (As of Nov. 2014)

Rite Aid Corp's total inventories for the quarter that ended in Nov. 2014 was $2,998 Mil. Rite Aid Corp's average total inventories from the quarter that ended in Aug. 2014 to the quarter that ended in Nov. 2014 was $2,960 Mil.

In Ben Graham’s calculation of liquidation value, inventory is only considered worth half of its book value. Rite Aid Corp's liquidation value for the quarter that ended in Nov. 2014 was $-6,499 Mil.

Inventory can be measured by days sales of inventory (DSI). Rite Aid Corp's days sales of inventory (DSI) for the three months ended in Nov. 2014 was 40.36.

Days inventory indicates the number of days of goods in sales that a company has in the inventory. Rite Aid Corp's days inventory for the three months ended in Nov. 2014 was 56.63.

Inventory turnover measures how fast the company turns over its inventory within a year. Rite Aid Corp's inventory turnover for the quarter that ended in Nov. 2014 was 1.61.

Inventory to revenue ratio determines the ability of a company to manage their inventory levels. It measures the percentage of Inventories the company currently has on hand to support the current amount of Revenue. Rite Aid Corp's inventory to revenue ratio for the quarter that ended in Nov. 2014 was 0.44.


Definition

Total Inventories includes the raw materials, work-in-process goods and completely finished goods of a company. It is a portion of a company’s current assets.


Explanation

Inventory control is an important part of business operation. If a company does not have enough inventory, it may not be able to meet customers’ required delivery time. If it has too much inventory, the cost of holding the inventory can be high.

1. In Ben Graham’s calculation of liquidation value, inventory is only considered worth half of its book value.

Rite Aid Corp's liquidation value for the quarter that ended in Nov. 2014 is

Liquidation value (Q: Nov. 2014 )
=Cash and Cash Equivalents-Total Liabilities+(0.75 * Account Receivable)+(0.5 * Inventory)
=232.954-8978.644+0.75 * 996.545+0.5 * 2997.595
=-6,499

2. Inventory can be measured by Days Sales of Inventory (DSI).

Rite Aid Corp's Days Sales of Inventory for the three months ended in Nov. 2014 is

Days Sales of Inventory (DSI)
=Average Inventory (Q: Nov. 2014 )/Revenue (Q: Nov. 2014 )*Days in Period
=2959.899/6692.333*365 / 4
=40.36

3. Days Inventory indicates the number of days of goods in sales that a company has in the inventory.

Rite Aid Corp's Days Inventory for the three months ended in Nov. 2014 is calculated as:

Days Inventory=Average Inventory (Q: Nov. 2014 )/Cost of Goods Sold (Q: Nov. 2014 )*Days in Period
=2959.899/4769.02*365 / 4
=56.63

4. Inventory Turnover measures how fast the company turns over its inventory within a year.

Rite Aid Corp's Inventory Turnover for the quarter that ended in Nov. 2014 is calculated as

Inventory Turnover=Cost of Goods Sold (Q: Nov. 2014 ) / Average Inventory (Q: Nov. 2014 )
=4769.02 / 2959.899
=1.61

5. Inventory to Revenue determines the ability of a company to manage their inventory levels. It measures the percentage of Inventories the company currently has on hand to support the current amount of Revenue.

Rite Aid Corp's Inventory to Revenue for the quarter that ended in Nov. 2014 is calculated as

Inventory to Revenue=Average Inventory (Q: Nov. 2014 ) / Revenue (Q: Nov. 2014 )
=2959.899 / 6692.333
=0.44

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.


Be Aware

Manufacturers with durable competitive advantages have the advantage that the products they sell do not change, and therefore will never become obsolete. Buffett likes this advantage.

When identifying manufacturers with durable competitive advantage, look for inventory and net earnings that rise correspondingly. This indicates that the company is finding profitable ways to increase sales which called for an increase in inventory.

Manufacturers with inventories that spike up and down are indicative of competitive industries subject to boom and bust.


Related Terms

Revenue, Cash and Cash Equivalents, Total Liabilities, Account Receivable, Inventory, NCAV, Days Inventory, Cost of Goods Sold, Inventory Turnover, Inventory to Revenue


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

Rite Aid Corp Annual Data

Feb05Feb06Feb07Feb08Feb09Feb10Feb11Feb12Feb13Feb14
Inventory 2,3102,3412,3363,9373,5093,2393,1583,1383,1552,994

Rite Aid Corp Quarterly Data

Aug12Nov12Feb13May13Aug13Nov13Feb14May14Aug14Nov14
Inventory 3,0233,0973,1553,1363,2163,3012,9942,9332,9222,998
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